Iran Sanctions Updated April 14, 2020 Congressional Research Service https://crsreports.congress.gov RS20871 SUMMARY RS20871 Iran Sanctions April 14, 2020 Successive Administrations have used economic sanctions to try to change Iran’s behavior. U.S. sanctions on Iran, which are primarily “secondary sanctions” on firms Kenneth Katzman that conduct certain transactions with Iran, have adversely affected Iran’s economy. The Specialist in Middle sanctions arguably have not, to date, altered Iran’s pursuit of core strategic objectives Eastern Affairs including its support for regional armed factions and its development of missiles. Arguably, sanctions did contribute to Iran’s decision to enter into a 2015 agreement that put limits on its nuclear program. During 2011-2015, the global community pressured Iran economically, and Iran’s economy shrank as its crude oil exports fell by more than 50%, and Iran was rendered unable to access its foreign exchange assets abroad. Iran accepted the 2015 multilateral nuclear accord (Joint Comprehensive Plan of Action, JCPOA) in part because the agreement brought broad sanctions relief. The Obama Administration waived relevant sanctions and revoked relevant executive orders (E.O.s). United Nations and European Union sanctions were lifted as well. Remaining in place were U.S. sanctions on: U.S. trade with Iran, Iran’s support for regional armed factions, its human rights abuses, its efforts to acquire missile and advanced conventional weapons technology, and the Islamic Revolutionary Guard Corps (IRGC). U.N. Security Council Resolution 2231, which endorsed the JCPOA, provided for a non-binding restriction on Iran’s development of nuclear-capable ballistic missiles and kept in place an existing ban on its importation or exportation of arms. The latter ban expires on October 18, 2020. The sanctions relief enabled Iran to increase its oil exports to nearly pre-sanctions levels, regain access to its foreign exchange funds, and order some new passenger aircraft. On May 8, 2018, President Trump announced that the United States would no longer participate in the JCPOA. All U.S. secondary sanctions were re-imposed as of November 6, 2018. Sanctions have since been at the core of Trump Administration policy to apply “maximum pressure” on Iran, with the stated purpose of compelling Iran to negotiate a revised JCPOA that takes into account U.S. concerns beyond Iran’s nuclear program. The policy has caused major companies to exit the Iran market, and Iran’s economy fell into severe recession. Iran’s oil exports decreased dramatically, particularly after the Administration in May 2019 ended sanctions exceptions for the purchase of Iranian oil. The Administration has also sanctioned several senior Iranian officials. Iran has continued to develop its missile force and to provide arms and support to a broad array of armed factions operating throughout the region, while refusing, to date, to begin talks with the United States on a revised JCPOA. The European Union and other countries have sought to keep the economic benefits of the JCPOA flowing to Iran in order to persuade Iran to remain in the nuclear accord. In early 2019, the European countries created a mechanism to facilitate trade with Iran but the vehicle only completed one transaction in its first year of operations. Since mid-2019, Iran has responded to the increasing sanctions by decreasing its compliance with some of the nuclear commitments of the JCPOA and by conducting provocations in the Persian Gulf and in Iraq. The COVID-19 pandemic has prompted international criticism that U.S. sanctions on Iran might be hindering Iran’s response to the outbreak. Iran has reported more cases and more deaths from the illness than any other country in the region. Numerous accounts indicate that sanctions have hindered Iran’s ability to finance the purchase of medical equipment, even though U.S. sanctions do not apply to humanitarian transactions. In March 2020, the Administration revised public sanctions guidance to prompt foreign companies to proceed with sales of humanitarian items to Iran. The Administration has also offered assistance to help Iran deal with COVID-19, but Iran has refused the U.S. aid. Iran has applied to the International Monetary Fund (IMF) for a $5 billion loan. See also CRS Report R43333, Iran Nuclear Agreement and U.S. Exit, by Paul K. Kerr and Kenneth Katzman; and CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions, by Dianne E. Rennack. Congressional Research Service Iran Sanctions Contents Overview ......................................................................................................................................... 1 Blocked Iranian Property and Assets ............................................................................................... 1 Executive Order 13599 Impounding Iran-Owned Assets .......................................................... 3 Sanctions for Iran’s Support for Armed Factions and Terrorist Groups .......................................... 4 Sanctions Triggered by Terrorism List Designation .................................................................. 4 Exception for U.S. Humanitarian Aid ................................................................................. 5 Sanctions on States “Not Cooperating” Against Terrorism ...................................................... 5 Executive Order 13224 Sanctioning Terrorism-Supporting Entities ......................................... 5 Implementation of E.O. 13224 ............................................................................................ 6 Foreign Terrorist Organization (FTO) Designations ................................................................. 6 Other Sanctions on Iran’s “Malign” Regional Activities .......................................................... 7 Executive Order 13438 on Threats to Iraq’s Stability ........................................................ 7 Executive Order 13572 on Repression of the Syrian People. ............................................. 7 The Hizballah International Financing Prevention Act (P.L. 114-102) and Hizballah International Financing Prevention Amendments Act of 2018 (P.L. 115-272). .......................................................................................................................... 7 Ban on U.S. Trade and Investment with Iran .................................................................................. 8 JCPOA-Related Easing and Subsequent Reversal .............................................................. 8 What U.S.-Iran Trade Is Allowed or Prohibited? ...................................................................... 8 Application to Foreign Subsidiaries of U.S. Firms .................................................................. 11 Sanctions on Iran’s Energy Sector................................................................................................. 12 The Iran Sanctions Act ............................................................................................................ 12 Key Sanctions “Triggers” Under ISA ............................................................................... 12 Mandate and Time Frame to Investigate ISA Violations .................................................. 16 Interpretations of ISA and Related Laws .......................................................................... 17 Implementation of Energy-Related Iran Sanctions ........................................................... 19 Iran Oil Export Sanctions: Section 1245 of the FY2012 NDAA Sanctioning Transactions with Iran’s Central Bank ................................................................................. 20 Implementation/SREs Issued and Ended .......................................................................... 21 Waiver and Termination .................................................................................................... 22 Iran Foreign Account “Restriction” Provision ........................................................................ 22 Sanctions on Weapons of Mass Destruction, Missiles, and Conventional Arms Transfers ........... 23 Iran-Iraq Arms Nonproliferation Act and Iraq Sanctions Act ................................................. 24 Implementation ................................................................................................................. 24 Waiver ............................................................................................................................... 25 Banning Aid to Countries that Aid or Arm Terrorism List States: Anti-Terrorism and Effective Death Penalty Act of 1996 .................................................................................... 25 Implementation ................................................................................................................. 25 Proliferation-Related Provision of the Iran Sanctions Act ...................................................... 25 Iran-North Korea-Syria Nonproliferation Act ......................................................................... 25 Implementation ................................................................................................................. 26 Waiver and Termination .................................................................................................... 26 Executive Order 13382 on Proliferation-Supporting Entities ................................................